When it comes to your money, sometimes it’s difficult to separate old wives’ tales from solid financial advice. As with any other conventional wisdom, just because everybody knows something to be true doesn’t actually make it the Truth. If the folk wisdom you’re following advises you to throw spilled salt over your shoulder, there’s no harm done. But myths about money can really cost you.

5 Myths About Money

Here are five money myths that you could unconsciously be following:

1. You have to carry a balance on your credit card in order to have a good credit score.

I’m not sure who started this ridiculous myth, but it’s time to slay this costly rumor. It is necessary to use credit in order to have a good credit history and score, but using a credit card that you pay off each month will generate a credit history. Paying off the balance each month saves you from whatever interest rate your credit card charges. So if you have been excusing your habit of paying the minimum balance each month as a way to improve your credit score, you’ve been fooling yourself and paying through the nose, to boot.

2. A big tax return is free money every spring.

While everyone has experienced the lovely surprise of getting a small “bonus” back from Uncle Sam after filing taxes, you need to remember what that big tax refund check really is: YOUR MONEY! By allowing the government to deduct that money from each paycheck only to send it back to you in April, you’re in effect giving the government an interest-free loan. Rather than play “hide your money from yourself” each year, deduct that amount from your paycheck yourself and put it in an interest-bearing savings account. Make that money work for you!

3. I don’t make enough money to save.

I’ve heard this myth from various individuals at all income levels — from retail wage slaves to teachers well ensconced in their careers to engineers working for a world-renowned automaker. The basis of this myth is that all of your “needs” are non-negotiable. If you take a long, hard look at your budget, you will find that you can free up at least a little bit of money every paycheck. It may feel like you’re giving something up, but you’re really just buying yourself a good future. Won’t it be much more of a sacrifice to keep working until you’re 90?

4. Debt is just part of being an adult.

For many individuals, the assumption is that you have to live above your means just to get by in life. These individuals assume that without the new house, car, luxury bag, etc. people will judge them negatively and they will have trouble being successful enough to… pay off the house, car, luxury bag, etc. Debt is not a natural part of life.

It is perfectly reasonable to live debt-free and still project success. Isn’t living well within your means a much more successful strategy?

5. Financial planning are only for the wealthy.

As the daughter of a financial planner, I’m ashamed to admit that allowed myself to believe this myth for too many years. Despite knowing better, throughout much of my 20s I felt that I didn’t earn enough money to make it worthwhile to plan out my financial future. No matter what your income level, you owe it to yourself to make a plan for savings, for retirement, and for your children’s education. The earlier you start a financial plan, the longer you have to stick to it and make sure that all of your needs are taken care of.

Do you know any other money myth? Please share.

Photo by Courtney Carmody.